Rebalancing What?

Europe's political focus has shifted determinately from austerity to growth, innovation and future competitiveness.

Much of this current discussion has revolved around ‘rebalancing’ the economy in favour of industrial policies that would help revive manufacturing.

However, as Mariana Mazzucato stresses in a new Policy Network paper, rebalancing requires changing the dysfunctional influence that finance has had on indicators of economic performance in all sectors, including manufacturing. The problem is not only one of short-termism, it is also about the way in which financial activities focused on value extraction have been rewarded above activities focused on value creation - often leading to value destruction.

In providing a key set of policy points and reforms based on the results of an extensive European consortium project (Finance, Innovation & Growth: The FINNOV project) Mazzucato concludes that: "Without such reforms, finance will continue to reap rewards while contributing little to real value creation and we will remain simply wed to trendy talk about growth, with no real mechanisms to make it happen for the long-term."

Download the PDF above (which includes a summary of key policy messages)

About the author Mariana Mazzucato is RM Philips Professor in Science and Technology Policy, University of Sussex (SPRU) www.marianamazzucato.com (twitter: @MazzucatoM, email: m.mazzucato@sussex.ac.uk)